Per diem is a Latin phrase that means "by the day". In the work world, it generally refers to one of two things:

• Daily allowances given to employees to cover daily business-related travel expenses: A per diem is a daily allowance given to employees by a company so that the employee can cover certain expenses while traveling for business. These expenses typically include lodging, meals, and incidentals. Per diem payments can cover part or all of the expenses incurred, and businesses may refer to the federal per diem rate when determining a payment amount, but they dont have to stick to it.

• How some workers are paid: Some workers are paid per diem, meaning they receive their wages by the day or by the quantity of work done, as opposed to receiving a salary that pays bi-monthly. These types of workers are usually on temporary or short-term contracts, and examples include travel nurses and substitute teachers.

Per diems have a few benefits for both employers and employees. For example, providing employees with per diems can minimize paperwork and avoid lengthy reimbursement claims processes. Employees traveling without a per diem would otherwise have to keep up with receipts and submit claims for out-of-pocket expenses like food and lodging. The company would then have to process the claims paperwork before approving or rejecting the request and issuing reimbursement payments to employees. Additionally, providing a per diem may help employees avoid unnecessary taxation because per diems set at or below the federal rate arent considered income.